On the Internet, there are many instances of online lending and sellers that permit a buyer to lease or purchase an item. Leases are an established means of financing many purchases, particularly leasable items like computer systems, and other large equipment. Technically, in most leases, the Seller sells the goods to the Lessor, who then lends the goods to the Buyer. Thus, the Lessor retains, or obtains, ownership of the goods, while the actual use of the goods is made by the Buyer. For simplicity, the term “Buyer” will be used to refer to the end user, while the term Lessor will be used to refer to the actual purchaser of the items.
A Buyer may arrange a lease in advance of or at the time of purchase. In establishing a lease, Lessor generally evaluates the credit-worthiness of the Buyer, to determine whether or not to offer a lease, and what leasing terms to offer. Leasing terms may include a maximum value leased, lease duration, lease factor (interest rate), options for initial buydown payment, purchase options, and residual value. The Lessor may offer many choices, and permit the Buyer to select the terms and options that fit the Buyer's needs.
A Seller may offer items that are leasable, conditionally leasable, or non-leasable. Conditionally leasable goods are those that are individually nonleasable, but may be leased as an adjunct to a leasable good. For example, copy paper may be conditionally leasable, if the purchase of the copy paper is coupled to the lease of a copy machine. For such conditionally leasable goods, there may be a ratio, i.e., the conditionally leasable goods may be 20% of the total leasing price. Generally, each Lessor may have specific rules for classifying goods as leasable, conditionally leasable, or non-leasable for this purpose.